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Are Generalists Beneficial to Corporate Shareholders? Evidence from Sudden Deaths

Author

Listed:
  • André Betzer

    (BUW - Schumpeter School of Business and Economics)

  • Maximilian Ibel

    (BUW - Schumpeter School of Business and Economics)

  • Hye Seung (Grace) Lee

    (Fordham University)

  • Peter Limbach

    (University of Cologne - Centre for Financial Research (CFR))

  • Jesus M. Salas

    (College of Business at Lehigh University)

Abstract

This study documents a positive, economically meaningful impact of executives’ general managerial skills on shareholder value. Examining 171 sudden executive deaths over thirty years, we find that a one-standarddeviation increase in the general ability index corresponds to at least a 1.5 percentage point decrease in abnormal stock returns to death announcements. Generalists are found to be significantly more valuable for firms with fewer growth prospects where difficult tasks (e.g., restructurings) need to be performed and adaptations to changing business environments become necessary. Our results provide a market-based explanation for the documented generalist hiring premium and the increasing share of generalists.

Suggested Citation

  • André Betzer & Maximilian Ibel & Hye Seung (Grace) Lee & Peter Limbach & Jesus M. Salas, 2017. "Are Generalists Beneficial to Corporate Shareholders? Evidence from Sudden Deaths," Schumpeter Discussion Papers SDP16009, Universitätsbibliothek Wuppertal, University Library.
    • Handle: RePEc:bwu:schdps:sdp16009
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    executive heterogeneity; managerial work experience; firm value;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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